Telecom Egypt may not exit Vodafone stake after landing new license: CEO

Reuters, Thursday 13 Nov 2014

A stake in Vodafone Egypt remains a hurdle for fixed-line TE to start operations in mobile market

File photo (Al-Ahram)

Egypt's fixed-line monopoly Telecom Egypt said on Wednesday it may not sell its 45 percent stake in mobile operator Vodafone Egypt once it receives a license to offer its own mobile services.

The Egyptian government, which owns 80 percent of Telecom Egypt, has said that for competition reasons the company would need to exit Vodafone Egypt once it has the new unified fixed-line and mobile license, which it expects to get in coming months.

Chief Executive Mohamed Elnawawy, however, said the company had "not been notified of any exit date" and could look at alternative options such as a taking a controlling stake in Vodafone, if the government approved.

"Before we put large capex in spectrum ... we would need to look at this asset and decide how to evolve with this asset to be buyers or sellers," Elnawawy said in a telephone interview.

"Now this, of course, depends on their appetite to sell or a promising value for which to exit at ... We have not reached that point yet."

Elnawawy said his company was hiring consultants to advise it on what to do with its minority holdings, including Vodafone.

Telecom Egypt agreed in May to pay 2.5 billion pounds ($350 million) for the unified license that would allow it to enter the lucrative mobile sector, competing against Vodafone Egypt and two other existing mobile providers.

Egypt's government approved plans for the unified license in September, but the contracts have yet to be activated. The government also said it had set up a committee to consider how Telecom Egypt should exit Vodafone Egypt by end-2015.

Telecom Egypt has relied on its data business to boost revenue while it waits to launch a mobile operation, but will begin by using existing networks rather than building new infrastructure. It is waiting to invest in fourth-generation telecom licenses the government plans to offer in coming years.

"We feel that mobile broadband is the name of the game and we do not want to build technologies which ... are not really relevant for the future," Elnawawy said.

As part of reforms to the sector, the government is also creating a telecoms infrastructure company, exposing one of Telecom Egypt's main markets to more competition.

The government says it will invite Telecom Egypt, as well as the mobile operators, which include Mobinil and Etisalat Egypt, and other entities to take stakes in the firm.

Elnawawy said Telecom Egypt would only participate if it made business sense.

"If it is repeating some or much of what we have, it is the prudent management action to not put shareholder capital in the same region, the same market in opposite directions," he said.

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